The flags of the U.K., EU, Scotland and Wales flying outside Britain's Houses of Parliament

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Debt rating experts Moody’s Investors Service and consultants Fitch Solutions have ventured into dangerous territory; trying to predict the impact on the British auto industry if the nation left the European Union without a deal.

Moody’s puts forward some detailed and disastrous predictions for automakers in Britain like Nissan, Honda, Toyota and Jaguar Land Rover (JLR). Fitch goes into less corporate detail but has some big political predictions. Given that nobody in British political life has the faintest idea of how the saga will end, that is very brave. Moody’s did make clear after questioning that its predictions are aimed at the unlikely event of a “no-deal” lasting more than a few days before solid arrangements are in place.

Prime Minister Theresa May faces a vote Tuesday which is likely to lead to the defeat of her E.U. Withdrawal Agreement. That will be followed later this week with a vote seeking to reject “no-deal”, and another one on extending the treaty – Article 50 – that brings Britain’s EU membership to an end on March 29.

Britain’s parliament has already voted to leave the EU on March 29, so if you had to guess the most likely outcome, it would be this; leaving, without a deal. This “no-deal” scenario has cranked up some horrendous theories, and Moody’s and Fitch grab hold of the worst ones. And they are not alone.

The auto industry has also signed up to some hysterical, damaging versions of the implications of Brexit. If there’s no deal, trade with the EU immediately comes to a halt as trucks block ports around Britain and northern France. When the traffic finally clears a bit, tariffs will be slapped on trade which will ruin the auto industry because of its need for smooth, uninterrupted supply chains. Before too long, all the big auto manufacturers in Britain will shut down, causing huge unemployment and economic carnage.

Luckily, there are more likely and benign scenarios.

Most likely, there will be a deal hammered together at the 11th hour between Britain and the EU. But if that fails, given the huge importance of two-way trade between the likes of Germany, France, and Britain, there will pressure to first of all to come up with a short-term fix. Limbo will only last days or maybe a few weeks at the most. There could be a decision to simply let the current arrangements continue until a formal free trade deal can be agreed. That could be carried out under the World Trade Organisation’s (WTO) Article 24, which allows nations planning a free trade agreement to continue current arrangements for up to 2 years. The EU and Britain currently have a free trade agreement.

If the worst comes to the worst, there is the WTO fall back option, which allows trade with agreed tariffs. Currently more than half of Britain’s exports are conducted under WTO rules. It is seamless. It is easy. OK, so a 10% initial tariff on autos is a negative, but Britain has had more than a 10% fall from the recent devaluation of its currency so that will provide some cushion. And many of the auto industry’s special global, just-in-time, supply lines already are conducted around the world across WTO tariffs seamlessly, thanks in part to new technology.

Yet Moody’s says a no-deal Brexit will cause disruption because of customs snarl-ups and rising costs.

Britain’s economy might be hit by higher unemployment, the report said. Companies will suffer. Nissan Motor’s overall profit margin will fall to 3.3% from 3.9%. Toyota and Honda will suffer from border controls, although Honda has already announced it is shutting its small British plant and not because of Brexit.

Tata Motors of India-owned JLR faces higher costs, as does BMW’s Mini operation and its imports into Britain.

“These companies will be required to take further steps to re-evaluate their production strategy in the U.K. and across Europe,” Moody’s said ominously.

But Moody’s pointed out, answering questions, that it was only talking about possibilities rather than certainties.

“Our report is setting out likely scenarios if a ‘no deal’ Brexit lasts more than a few days. We calculate additional cost originating from 10% tariff based on annual unit export from and import to the U.K. of the three Japanese automakers. Because the U.K. production of these automakers is highly interconnected to the EU, a no-deal Brexit will create significant negative impact through various channels, most notably, the cessation of tariff-free automobile trade with EU countries,” a spokesperson said.

Fitch Solutions had more general thoughts, but with some hefty assumptions built in.

Britain is likely to seek an extension of Article 50

Britain will be forced into a customs union, ruled out by the referendum in 2016, and the General Election of 2017.

A 2nd referendum is becoming more likely.

“Our core view for Brexit since mid-2018 has been that the U.K. will leave the EU on March 29 with a ‘soft Brexit’ also known as a ‘Brexit in name only’ (BRINO) deal, where the country remains part of a customs union as well as closely tied into the single market. This was in stark contrast to the government’s earlier stated objectives of taking the UK out of the single market and the customs union while maintaining an open border on the island of Ireland,” Fitch said.

Meanwhile Britain’s automotive lobby group, the Society of Motor Manufacturers and Traders (SMMT), published Monday “13 Automotive Brexit Myths – Busted”, predicting gloom and doom, but all based on the assumption that a so-called “no-deal” Brexit lasts for years, rather than the more likely outcome of a few weeks at most. This echoes the SMMT’s campaign in 1999 to persuade Britain to join the euro single currency. Catastrophe awaited if Britain stayed outside. It thrived outside.